Swelling fire insurance costs are posing a threat to California’s private park operators and the state’s tourism industry, California Outdoor Hospitality Association (COHA) President and CEO Dyana Kelley declared during a July 13 public hearing with California Insurance Commissioner Ricardo Lara.
“Unless state officials and the insurance industry can figure out ways to reign in these rapidly escalating insurance costs, the cost of travel and tourism within California will increase, California will lose travelers to other states, and we will begin to see private parks and even some hotels being forced out of business,” Kelley said.
According to a press release, COHA and California Travel Association are working together to urge state officials to address the skyrocketing fire insurance crisis that threatens to put campgrounds, RV parks, and hotel operators out of business while driving up the cost of travel and tourism throughout California.
During the investigatory public hearing with Lara and the representatives of the California FAIR Plan Association, Kelley added that another concern is that several insurance carriers are exiting the California market.
“As an industry, we are being tasked with expansion,” Kelley told hearing attendees. “We have more camping consumers than we have accommodations. Yet, one of the greatest barriers to entry into our industry is the ability to obtain insurance with appropriate coverage at reasonable rates.”
The California fire insurance problem has been a long-standing issue for park operators who have tried to find solutions through various means. One such solution, an effort of the state, is the FAIR Plan Association which offers private parks and hotels coverage when others simply refuse.
However, the offerings of Fair Plan’s insurance carriers come at an expensive price tag that many campgrounds cannot afford. Kelley shared that the fire insurance problem is not limited to areas previously touched by wildfires and that some park operators are facing five-fold increases in insurance costs—costs that are too high to simply pass onto their guests without pricing themselves out of the market.
Moreover, park operators complain that the coverage of the insurance policies is insufficient to cover their needs, leaving them facing increased insurance risks.
Kelley told hearing attendees that more affordable insurance options need to be provided to park operators along with better coverage of specific insurance risks or perils. “A typical property policy would provide broad coverage, which includes 11 perils. The FAIR Plan offers limited coverage with four perils,” she said.
What’s more, Kelley said, is that private parks and hotels can suffer significant financial losses from the cancellation of reservations simply as a result of drifting smoke or news reports about fires. Yet these types of individualized losses may not be covered by business interruption insurance due to the exclusions insurance companies have written, which calls into question a business interruption insurance’s value when it fails to protect against potential risks like those caused by natural events like wildfires.
“If park operators are not able to obtain reasonable insurance coverage through standard carriers, then expanded coverage under the FAIR Plan needs to be considered,” Kelley said, adding, “We would also recommend providing rebates or rate decreases for fire abatement strategies.”
Kelley, who is also a board member of the California Travel Association (CalTravel), also briefed the CalTravel board on the Insurance Commission hearing during CalTravel’s quarterly board meeting July 13. She later met with Emellia Zamani, CalTravel’s director of government affairs and public policy, to discuss how the campground and hotel industries can collaborate to push state and insurance industry officials to address the fire insurance issue.
“We’re bringing CalTravel into the fold to find a solution and to create a greater awareness of the fire insurance issues so that a solution can be found,” Kelley said, adding, “This problem is not going to go away. We need expanded insurance coverage, and we need more affordable insurance coverage than the policies FAIR Plan members currently provide.”
Kelley has requested a private briefing with Insurance Commissioner Ricardo Lara to further discuss issues involving fire insurance and how it can be provided for private park operators.
“I want to personally emphasize to Mr. Lara the very serious threat this insurance problem poses not only to campground and hotel operators, but to California’s tourism industry in general,” she said.
The California Outdoor Hospitality Association, previously known as CampCalNOW, represents California’s campgrounds, RV parks, and glamping resorts. The association also hosts one of the largest online listings of privately owned campgrounds in California, which it markets through Camp-California.com, the statewide travel planning website. More than 1,500 parks are listed on the website, many of which of family owned and operated.